It seems like most debit cards will be safe from the monthly carrying fee that was imposed by some banks during the third quarter of 2011. Consumer outrage caused such a backlash that the financial institutions have had second thoughts and rescinded the new debit card fees.

The second biggest bank in the United States, Bank of America, announced in September that it would start charging a $5.00 monthly fee to their clients who use their debit cards after the first of the year. As they disclosed that the new debit card fees would be waived for customers who had premium accounts or held large balances in their accounts, the customers who did not qualify for the waivers became enraged.  To many, it seemed that only consumers with lesser amounts of money would have to carry the burden of having to make up the profits that the bank lost because of federal limits on “swipe fees”. The backlash caused the Bank of America to step back from the proposed monthly fee and announced that they were no longer considering adding the new debit card fee for usage.

Are Debit Cards Losing Favor?

Before the new federal regulations on “swipe fees” limited the amount that the financial institutions were able to charge at the point of sales, banks encouraged their customers to use the bank debit cards because of the profits they were able to glean each time a consumer pull the piece of plastic from their wallet to make a purchase. With the banks charging the merchant an average of 44 cents each time the customer paid with the debit card, the fees amounted to millions of dollars a year in profits for the larger banks. On October 1^st, the new regulations limited the transaction fee to only 24 cents per swipe, and much of the profits, amounting to billions of dollars across the industry, were lost.

According to financial analysts, financial institutions hoped that they could get some of the profits back by charging new debit card fees and by making the use of credit cards more popular. In many cases, the additional fees on the cards would make it seem like the credit cards were cheaper to use. Banks make more money when credit cards are used than when debit cards are used, monthly usage fees or not.

Bank of America was not the only bank that had plans for the debit card. According to news reports, Regions, Sun Trust and Wells Fargo all canceled plans to add new debit card fees or to test the feasibility of adding carrying fees to the cards as angry consumers threatened to close their accounts and switch to other financial institutions.

Now that the plans for the monthly fee on the popular debit cards seem to have been put to rest, consumers should still be wary of other attempts by banks to recoup the profits that have been lost. Pay special attention to any changes to the fees that are already in place at your bank. Check the amount you are asked to agree to pay when you use your debit card for cash at an ATM machine. Carefully read any notice of changes of fees that are charged for your online transactions and make sure that the requirements for minimum balances in your bank accounts to avoid fees do not change.

Credit cards are a convenience. If you have been approved for a credit card that has some type of reward system, it can pay off every time you use the card. That is, if you are able to pay off the balance each month. Reward credit cards give the consumer an incentive to put all of their financial transactions on the card because each swipe can get them closer to the promised reward, whether it is cash back or points to another type of value.

Financially responsible consumers who can stay within their monthly budget find a lot of benefit using reward credit cards. For others, the risk is a lot higher than paying with a debit card or with cash. When you open up your wallet to pull out the currency out to pay for items, you are faced with actually seeing how much cash remains in your wallet. This is often a last chance to consider the purchase and if you are willing to lay out that much money for the item. You lose the final reality check if you just swipe the credit card.

Are There Risks to Using Credit Cards with Rewards?

The more you get into the habit of using your credit card instead of a debit card, or paying in cash, the greater becomes the likelihood that a statement from your reward credit cards will arrive that you will not be able to pay off in full. When that happens, interest will be charged on the balance. Interest and service fees on the balance may wipe out any reward that you have earned during the month.

Credit cards carry a higher protection against fraud than debit cards do. You are only responsible for unauthorized charges to your credit card up to the amount of $50.00 by federal law. If you report that your credit cards have been lost or stolen before an unauthorized charge is made, the Fair Credit Billing Act provides that you will have no liability for any subsequent charges.

If only the account number of the credit card is lost, but you still have possession of the card itself, the law also protects you and you are not responsible for the charges.

Many users are under the mistaken assumption that the debit card is safer than the credit card when it comes to unauthorized charges. Most banks make the promise that you have zero liability for fraud on your debit card. This depends, however, on the amount of time it takes you to recognize unauthorized charges and report the fraud to the bank. If you notice the unauthorized charges and report them within two days of them being made to your account, the liability limit to you is $50. If you don’t notice that the charges have been made and fail to report fraud for two days, your liability is $500. It is important that you pay attention to your debit card transactions because you will face the risk of unlimited loss if the unauthorized transfer is not reported within 60 days.

Using a credit card with rewards works well for many people, as long as they are aware of all of the risks they face as well as the rewards. Because many of the reward credit cards have some fees associated with them, it is important to make sure that you understand all of the costs and penalties that their use may involve. Paying cash works better for others. Whichever option that you choose, make sure that you use it responsibly.

In today’s society, we are online all of the time. Most of us use the internet for our employment. Others use it for their enjoyment. We shop online using a credit card, stay in contact with family and friends through social media sites and even get direction to our destinations by typing an address in the search bar and letting the search engine of our choice pull up a map and driving directions from our own driveway.

To use the resources that add efficiency and joy to our lives, we type a lot of information into a lot of forms. It’s just the way of life. Name and address, date of birth and email address are needed to register at most websites. We do not give it a second thought, and often we do not stop to think when we are asked for our telephone number and required to answer security questions just to play a game.

How Safe is Your Credit Card and Other Personal Information?

When making purchases online, it is only natural to have to give a credit card number or bank information. It’s a way of doing business and we have moved away from worrying about protecting our identity when we are online.

The way that we search for information online also tells a lot about us. If you use Yahoo or Google, they keep the information on your searches for 18 months.

Last year hackers found their way into the website of AT&T and released information, including email addresses of over 100,000 iPad owners who used the wireless internet services provided by AT&T. Consumers didn’t seem to feel threatened as over 17 million iPads were sold after this breach was announced.

The location of the SmartPhone is recorded. Over time, a pattern of the owners travel can easily be deduced if that data log is compromised. Consumers seem to be aware of this on some level, but appear to be unconcerned. After all, look at the number of people who update their Facebook status each time they leave the house and tweet their progress to complete strangers.

We agreed to the privacy policy about our personal information when we registered to use the website. It is the only way we could gain access. In reality, few people bother to read the long documentation,  even if it’s a site that we will give our credit card information to. Those who take the time to read the privacy information find that much of it is hard to understand.

It’s a bit scary when we stop and think about. But scarier still is the information that is available online that we didn’t offer.

Businesses also use the internet to collect data on us. In addition, our medical care providers, financial institutions and even our landlords keep personal information in databases to make their record keeping and reporting processes easier.

Once we give another business our personal data, we have to trust that they will keep it safe.

Sony has disclosed that information on approximately 77 million customers who use its PlayStation gaming network may have had their credit card numbers stolen by hackers. Heartland Payment Systems was attacked in 2008, resulting in the theft of 130 million credit card numbers. In 2005 and 2006 TJX Cos. Was compromised, resulting in access to 100 million accounts. These were large security breaches that were reported by the media. Smaller security breaches are often not publicized.

It would seem that although we are exposed to information warning of us the dangers of identity theft on a continuous basis, the consumer still finds the convenience and entertainment of internet use worth the risk of our personal information, including credit card information, one of the perils of living in today’s world.

It is getting harder and harder to live within the monthly budget for many people. Some are even finding that it is hard to get from paycheck to paycheck. The expenses for living seem to get higher while income seems to be frozen. By the time the rent and energy bills are paid, some people are forced to take money from the food and transportation budgets just to make an on-time payment to the credit card company. Even worse, if a car repair is needed or a son or daughter needs a special item for school or a new pair of shoes, many are forced to put the expense on their already burdened credit card. You may be tempted to open a new line of credit that offers low rates on credit card balance transfers.

When you cannot pay off your credit card balance every month, the added interest and service fee charges make small emergency transactions even more expensive.  Even if you have shopped around and purchased the least costly version of the needed item, the interest and service fees that accumulate from the time you bought the item have made this little purchase a major factor of your overall debt.

As the total amount of your credit card balance goes up with every billing cycle, the amount of the minimum payment may also be rising. If it reaches a point where your payments are late, or if you are forced to skip a payment, the interest rate you are charged on the balance may also go up. This will make it even harder to pay off the debt unless you are able to find a quick way to reduce the balance.

When you open a new credit card account with the intentions of paying off an existing credit card with an unwieldy balance and high interest rates, there are a few things that you should be aware of to keep you from just getting further into debt.

Introductory Rate

The introductory rate that is offered to you when you are approved for a new credit card is only for a limited time. If you feel that you will be able to pay off the credit card balance before the low introductory rate expires, you may want to investigate the card and apply. Be aware of language on the offer that says you ‘may be approved’ or prefaces the introductory interest rate with ‘as low as’. You may find yourself with a new credit card that has a lower line of credit and higher rate of interest than you thought you were getting.

Credit Score

When you apply for the new line of credit, you may see that your credit score goes down. Many times, collection agencies see requests for additional credit as a clue that the applicant is facing financial difficulties. The temporary change to the score is less damaging in the long run than reports of late payments, so unless you are applying for several lines of credit at once this may not cause you a problem.

Transferring a balance to a new credit card is not something you should do lightly. Examine all of the pros and cons to make sure you are making the best financial decision. Look for hidden fees that may be associated with balance transfers, or even with the acceptance of the credit card account. If you are able to reduce your overall debt by reducing the amount you pay on interest and fees each month, and in turn, pay more on the balance of the credit card debt, a transfer may be the best route.

As the economic news seems to hold no promise that your financial stability will improve in the near future, people are finally realizing that it is time to take matters into their own hands and dig their own way out of credit card debt. Even if you have been making regular, on-time payments on all of your credit cards for the past several years, as you go over your budget, you come to a sad realization. If you have paid only the minimum amount due on your monthly balance, your overall debt has not gone down.

We have all heard the warnings. Pay more than the minimum balance to make a dent in the original debt.  Unfortunately, most budgets do not have the extra money to add to the monthly payment. We have been thankful that we could find the money to keep our credit in good shape by paying the minimum amount due each month. It just seem unfair that all those on-time monthly payments did nothing to relieve our overall debt load. That is a lot of money that we have paid out with nothing to show for it.

The first thing that we have to realize is that we have fallen for a marketing campaign that made us feel that we were in good financial shape as long as we could pay our bills each month as they became due. Most of us did not realize that we were getting deeper and deeper into overall debt. We felt safe. It is only now, adding our total debt up and looking at the staggering amount of unsecured debt that we owe that we realize how dangerously close we have gotten to a severe financial problem.

Credit limits on our credit cards have been steadily gone up over the past years, giving us more flexibility in our spending habits. As we neared the top of our credit limit, it seemed that it was raised and the monthly minimum payment, though also higher, was not elevated significantly, making it easy to decide in favor of a new purchase.

Now that we are armed with the knowledge that we will never get out of credit card debt by simply paying the minimum due each month, it is time to make a plan, tighten our belts, and face the reality that sacrifices will have to be made to get our long-term financial plan in order. For added incentive, just add up the outstanding balances on all of those credit cards to see how much you really owe.

Go over your monthly budget and slash the extra items that you can live without. You are no longer living in the fantasy world of being financially safe just because you can make the monthly payments. You are living in the real world fraught with the possibility of a loss of employment and medical coverage, combined with a higher cost of living. Reduce the amount you are paying for extras like cable TV, entertainment expenses, and lunches out. If your cell phone contract is due to expire, consider getting a less expensive package.

Take the money that you have carved from your monthly budget and make arrangements to have this amount automatically added to the amount you pay on your credit card accounts each month. So that you do not face the temptation of reverting back to paying off only the minimum amount due, set up an auto-pay for the accounts, adding the extra sum to the monthly payment. Consider it a firm commitment, like the amount you pay for rent, mortgage, or auto insurance.

If extra money happens along, use it to chip away at credit card debt. Be realistic. Your debt load will not magically disappear by the end of the year, but you have entered the real world and know that your feet are on the way to financial responsibility and your head is no longer in the clouds. Slowly, you credit card debt is being reduced.

You may have seen the ads on television and non-profit agencies set up to help you escape debt by offering a credit counseling service. They promise to “consolidate” your debt into one lower payment at no cost to you.

The way they get paid is through “donations” from your creditors. They negotiate with all of your creditors to lower your interest rates and payments. You pay the counselor the sum of your creditors; payments. They send the payments to the creditors. In exchange, the creditors pay the counselor a donation. Sounds like a good deal, right?

Before committing to such a service, you must understand what their purpose is. In order to attain a non-profit status with the IRS, they must provide actual educational services to consumers to help with their debt management, budgeting, and so forth. Currently, the IRS is auditing many of these organizations. So far, they have found that these credit counselors do not provide such a service and only exist to receive fees from creditors. They have revoked the non-profit status from several companies. These companies are called predatory credit counselors. They take your monthly payment, and instead of shipping it off to your creditors, they pocket the money for themselves. These bad apples have put the consumer in a real dilemma.

The new United States bankruptcy laws will require debtors to enter a credit counseling program before actually entering bankruptcy. In theory, credit counseling can be a great service when executed correctly by all parties involved. That is, the counselors actually provide an educational service and the consumer actually learns and implements what they’re told. This can pave the way to a secure, debt-free future.

What can you do to avoid becoming a victim?

First, find out if there are any fees charged to you by the counseling agency. Even if they’re non-profit, they may still charge you for their services up-front, such as a setup fee. A reputable company won’t charge you exorbitant amounts for fees, as that would defeat the purpose of seeking their assistance in the first place.

Next, try to ascertain how your counselor is paid. If they make a salary, you’re in good shape. If they work for commissions or earn bonuses based on steering you towards more expensive debt consolidation programs, be wary. Good counselors will do what’s best for your pocket, not theirs. Just because the credit counselors work with creditors doesn’t mean creditors work with that particular company. When a consumer enters a credit counseling program, the counselor sends a proposal to the creditor. The creditor then has the option of approving or rejecting the proposal. If rejected, there is nothing further that can be done with that particular creditor. You’ll have to negotiate with them on your own. Call your creditors directly and make sure they will accept the proposal first. Get all promises and terms made by the counselor in writing. A verbal promise is not binding. As well, make sure the counseling agency sends monthly reports that outline every transaction; how much you paid them and where the money is going. Verify that your money is actually paying your creditors, and not your counselors.

How does entering credit counseling affect your credit? It depends on an individual lender as to how they view credit counseling. Your counselor will have you believe that it’s a positive because you’re taking proactive steps to get your debts in order. However, many lenders view credit counseling as the final step before bankruptcy. Entering counseling might signal to them that you have a debt management problem, and suspect that you may default on their loan. In fact, many lenders will deny your application outright if you’re currently in a debt management program, as if you were in an non-discharged bankruptcy. If you’re in a situation that might require credit counseling, or even bankruptcy, check your credit report first. Make sure that your report is completely accurate. If necessary, take steps to increase your credit score. You might benefit more from taking out an actual loan to consolidate your debts than to enter debt management and bankruptcy. You can only get a loan if your scores are high enough. Make an effort to raise your scores, get a consolidation loan, and make sure you never get into the same debt situation again!

Debt consolidation companies are a dime a dozen, especially today. These companies have been hugely-successful because the number of people in debt has been growing steadily. The same people would try to manage their debts through debt consolidation methods. Some succeed easily enough while others fall into more debt trap.

Before deciding that debt consolidation is right for you, make sure that you are well-informed about it. For starters, you should know that there are many debt consolidation dangers including the following:

False Promises
There are certainly plenty of debt consolidation companies which will offer you too-good-to-be-true deals and chances are, they are. These companies are in the business of advertising that debt consolidation loans will provide you with so much convenience, you will have to wonder why you never considered them from the beginning. Although debt consolidation is really an effective way to get rid all your debts, you should remember the responsibilities that come with it. Even though the consolidation company will offer to do everything for you, you will have to understand that it will take a deep lever of commitment in order for this to work.

Hard Money Loans
Debt consolidation loans are really designed for people with credit problems. These loans are usually offered with a higher-than-standard interest rate. Although you can arrange the monthly payments to be smaller compared to what you have been paying in total, you might end up paying more than what you initially thought. To determine whether you will actually be saving money, you should try and compare the offers of several different companies. You can simply request a quotation from these debt consolidation companies and look at their best offers side by side.

Falling for Balance Transfer
Applying for balance transfer can show up in your credit report and cause you to lose precious credit points. If your application for a balance transfer is denied, you will still have to deal with all your debts. Unfortunately, your credit score may have been affected already by the balance transfer application and taking out a personal or home equity loan will mean higher interest rates and bigger monthly payments. If you do get approved, you will only enjoy the low interest rate for a pre-determined period and if this period is over, you will be paying a much higher interest rate.

When considering debt consolidation, it is very important that you are aware of the current status of your finances. Weigh available options carefully and make sure that if you do decide to apply for a debt consolidation loan, you can shoulder the responsibilities of paying it. Otherwise, you are just asking for more problems and this time your luck might run out.

Do you have too much credit card debt?  Perhaps you’re on the brink of entering this predicament, where you are already months behind on some of your payments. There are a few steps you can take to dig yourself out.

First, write out all of your debts, including payments, balances owed, and interest rates. Include your mortgage or rent and every utility bill and cell phones, gym memberships, cable TV, car insurance, everything. Take inventory of everything you pay out. With everything listed, prioritize which liabilities are the most important. Obviously, mortgage would earn the top spot on your list. Next would likely be your utility bills. Water, electric, and gas are absolute necessities. After utilities, any car loan you might have would be pretty important, although you can look to reduce this expense.

For example, you can sell your car and purchase a less expensive one. Hopefully, the new car will also be fuel efficient and less costly to insure. Once you’ve budgeted for life’s top priorities, it’s time to start cutting the fat. See if there is anything you can cancel without penalty. Gym memberships, cable television subscriptions, magazine subscriptions, and even cell phones are not categorized as bare essentials. You can get television over the air for free. You can work out at home. You can go to the library or browse the bookstores to read magazines. You can get a pre-paid cell phone plan that doesn’t require a monthly commitment. Remember, once your financial affairs are straightened out, you can always re-subscribe.

This brings us to your credit cards. It is always important to pay all of your debt on time. However, if you are truly overextended, this may not be possible. If you know that you need to miss a payment on at least one or two cards, you should be proactive with your creditors. Call each of your creditors and honestly explain your financial situation. Let them know that you will likely miss your next payment. Don’t make weak excuses. If you have a true hardship, you might find that your creditors might be willing to work with you. After all, it is in their best interest to do so. If you’re already behind, many creditors will arrange a payment plan to help you to catch up. Let them know that you are sincere in your sentiment to bring your account current. Tell them how much you might be able to afford every month. Inform your creditors that you fully intend to catch up.

Before you do, however, make sure you know exactly how much you can afford and stick to that number. Unfortunately, it becomes a game of hardball. Either they have to accept a lower payment, or they accept no payment at all. If they agree to a lower payment, make sure you get the terms of the payment plan in writing. Some companies might charge you interest or penalties in arrears. This means that they’ll tack on the missed interest payment at the end of your loan, although this mostly applies to installment loans like car loans and mortgages. If your situation is particularly dire, some creditors might allow you to skip a monthly payment or two, although this is rare. If they do offer it for you, be sure to get it in writing. You do not want to rely on the word of a customer service rep who might be working in a call center overseas.

Whether looking to request a payment plan, reduced payment, or a skipped payment, be persistent. If you don’t get the answer you’re looking for, call again. Most credit card companies are so large that you will never speak with the same person twice. Just because they all work for the same company doesn’t mean they all know what’s going on with your account. Call center workers have varying degrees of experience and responsibility. You just might get a different answer. While you’re looking to negotiate with your creditors, keep an eye on your credit scores. You want to be able to minimize the damage to your credit. In fact, if you have a little time before you have to miss a payment, get a copy of your credit report to see what your credit picture looks like. If your score is a little low, look into ways to increase your score in the quickest amount of time. Then, you might be able to secure a debt relief loan to consolidate your debts.

Credit cards are both a blessing and a curse. They are easy to use and convenient. Unfortunately, they are easy to use and convenient. What people don’t realize about credit cards is how much a credit card actually costs. They only see their balance and payment information without regard to any other charges or traps. At best, credit cards will cost nothing, especially if paid in full. At worst, credit cards can cost you your entire financial identity and good standing.

One pitfall of credit cards is the cash advance. Most credit cards will issue you a Personal Identification Number (PIN) so that you can withdraw cash at any ATM, just like a debit or bank card. Although the convenience is great, so is the cost. Cash advances from credit cards rarely, if ever, have a repayment grace period. In other words, interest accrues on your cash advance the minute you pull a greenback out of an ATM machine. This is in contrast to a purchase, where you might be afforded a period in which interest does not accrue.

Additionally, credit card companies charge more for cash advances than they do for purchases. If you read the fine print on your credit card fee schedule, you might find that the APR for cash advances is different than that of purchases or balance transfers. Not only do you pay interest from the minute you withdraw cash, you are paying more interest than normal. You might save more money if you purchased an item and sold it yourself.

Some credit cards will also charge you a cash advance fee on top of the higher interest rate. Add to this the ATM fees that banks will charge, and you have perhaps the most expensive way to put cash in your pocket. It’s always good to have the option to withdraw cash from your credit card, but only use it in an extreme emergency situation.

Another pitfall of credit cards is fraud. The new buzzword these days is “identity theft.” With the proliferation of shopping over the internet, it has become increasingly easy to use a stolen credit card to make purchases, not to mention telephone and catalog purchases. Further, pre-approved credit card offers can be swiped from mailboxes. Sometimes these offers will come pre-printed with personal information, including your name, address, phone number, and even your date of birth and social security number. This makes it extremely easy for another person to open an account in your name, or even represent themselves as you with your existing accounts.

Make sure you dispose of any pre-approved credit card offers securely if you choose not to take advantage of them. If you have no intention of obtaining a credit card from these offers, you can write to the address contained in the offer to remove your name from any further solicitation.

When a credit card bill arrives, some people never actually read the bill. They only read the minimum payment due, and maybe the balance. By doing so, you could be missing out on any potential fraudulent charges, or even honest overcharges. Scrutinize your bill to ensure that all charges are legitimate. You should also scrutinize the amount charged, as you might have been overcharged for something you bought. This can happen if the amount of your charge is manually entered into the credit card machine, instead of the machine obtaining the information from the cash register.

You should pay special attention to your APR and the finances charges. Credit card companies can increase your interest rate with no prior notice or warning, and they are within their rights to do so. The fine print of their cardholder agreement outlines the instances in which they can increase your rate. These events can include a late payment (even if it’s only 1 day late), going over your credit limit, and even the lowering of your credit score.

If you find that your APR is higher than when you applied, find out why. If it relates to your credit score, you might be able to get your rate back down to the original level if you raise your score. Get a copy of your credit report, find out your score, and take the necessary steps to boost it. You’ll save hundreds of dollars in interest charges in the long-run.